N.C. Court Discusses Application of Res Judicata in Quasi-Judicial Land Use Proceedings

by Womble Bond Dickinson

Today's topic is the North Carolina Court of Appeals' decision in Mount Ulla Historical Preservation Society, Inc. v. Rowan County, 11 CVS 2793 (February 18, 2014).  The full opinion can be accessed here.

The First Conditional Use Permit Decision
In 2005, the Rowan County, North Carolina board of commissioners denied a conditional use permit ("CUP") application for the location and construction of a 1350-foot radio tower on the basis that the proposed tower was determined to be a safety hazard to nearby Miller Airpark, a private airport ("2005 CUP application").  The applicants appealed to the Superior Court, which affirmed the quasi-judicial board's decision.

The Second Conditional Use Permit Application and Decision
In 2010, the same company applied for a conditional use permit for a 1200-foot radio tower "in substantially the same proposed location as the tower in the 2005 application that had been denied" ("2010 CUP application").  The same opponents to the 2005 CUP application moved to dismiss the 2010 CUP application as being barred by the doctrines of res judicata and collateral estoppel based on the Superior Court's decision to affirm the denial of the 2005 CUP application.  The board of commissioners denied the motion to dismiss and granted the 2010 CUP.

The Appeal of the Second Conditional Use Permit Decision
The opponents appealed to the Superior Court the County's decision to grant the 2010 CUP, arguing in part that the 2010 CUP application was barred by res judicata and collateral estoppel on the basis of the Superior Court's decision to deny the 2005 CUP application.  The Superior Court agreed, and reversed the quasi-judicial decision of the Rowan County board of commissioners denying the 2010 CUP.

The Decision on Appeal
The Court of Appeals reversed the Superior Court, concluding that res judicata did not bar the 2010 CUP application.

At the outset, the Court notes that the doctrine of res judicata "is available with respect to the proceedings and final decision of a judicial or quasi-judicial body", and the Court points out that "whether the doctrine of res judicata operates to bar a cause of action is a question of law reviewed de novo on appeal."

The Court then articulates the operative standard in order to avoid being barred by res judicata in successive quasi-judicial permitting procedures:  "DCBI’s 2010 CUP application must have materially changed the design of the proposed tower in such a way as to vitiate the concerns regarding air safety which led to the denial of the 2005 CUP application."  The Court continues, providing us with a "definition of 'material change' in the context of quasi-judicial land use decisions in North Carolina" and the application or non-application of res judicata:
"[A] material change which precludes the use of the defense of res judicata occurs when the specific facts or circumstances which led to the prior quasi-judicial land use decision have changed to the extent that they 'vitiate . . . the reasons which produced and supported” the prior decision such that the application “can no longer can be characterized as the same claim."
There it is.  The test governing the application of res judicata in a quasi-judicial land use proceeding.

But the Court's review as to the application of res judicata is a question of law, isn't it?  How can the Court of Appeals come to the conclusion that a "material change" occurred or has not occurred without looking at facts before the quasi-judicial board?  Here is how: "we conclude that the deferential whole record test applies to the [quasi-judicial board's] finding of a material change".  So, a reviewing court scours the "whole record" to determine whether a material change has occurred, and then looks "de novo" at the application or non-application of the doctrine of res judicata.

Great.  Now we need a finding of fact on which the reviewing Court may hang its "material change" hat, if it is to reverse the quasi-judicial board.  Did the quasi-judicial board find a fact on which it based its decision not to apply res judicata?  Nope, not in this case.  Back to the Court:  "Although the Board denied petitioners’ motion to dismiss on the basis of res judicata, it did not include, as part of its written decision approving the 2010 CUP application, any findings which suggest that there was a material change from the denied 2005 CUP application."

So, how may the Court of Appeals pivot its decision?  Specifically, what could be the fact found on which the Court may base its conclusion that a "material change" has occurred?  It is this fact, according to the Court: "However, by denying petitioners’ motion to dismiss [based, in part, on res judicata], the Board necessarily found that there was a material change between the two applications."

Ultimately, however, the Court of Appeals determines that the quasi-judicial board was incorrect in failing to apply res judicata to the 2010 CUP application.  Specifically, the Court of Appeals concludes that the only true difference between the 2005 CUP application and the 2010 CUP application was the 150-foot difference in height of the desired radio tower.  Again, the Court:  "as there was no material change between the 2005 and 2010 CUP applications, res judicata barred the Board from reconsidering its previous decision [from 2005]."

Don't forget Billy Joel's hit, "Don't Go Materially Changing".

An interesting day.  A more clear standard for the application of res judicata in a quasi-judicial land use proceeding.



DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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